This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.

Tuesday, September 30, 2014

A Kentucky Federal District
Court recently considered the question of whether certain minimal contacts with
Kentucky connected with the formation and operation of an informal partnership
were sufficient to vest in that court jurisdiction over the California resident
partner. The court found that the contacts were sufficient to give rise to
personal jurisdiction.Clark v. Wenger, Civ. Act. No.
1:14-CV-00002-TBR, 2014 WL 4742989 (W.D. Ky. Sept. 22, 2014).

Clark,
based in Kentucky, and Wenger, based in California, entered into a partnership
for the breeding and sale of Bernese Mountain Dog puppies.That partnership relationship was never
reduced to a written “partnership agreement.”Still, over time Clark identified certain conduct of Wenger which she
asserted violated express terms to which they had agreedFor example, it was asserted that Wenger had
bred two of the partnership’s dogs in her possession and sold for her own
account the puppies, and had let the male out for stud, again keeping the fees
earned for herself.Based upon these
violations of the partnership agreement, Clark sued Wenger in Kentucky.

After the
suit was removed to federal court (there was as well a dispute as to the
timeliness of the removal, but that I will leave to those interested in the
rules of federal removal), Wenger sought to have the suit dismissed on the
grounds she did not have “minimum contacts” with Kentucky sufficient to permit
her to be sued in Kentucky.

The Court
found what Wenger’s dealings with Clark were sufficient to confer
jurisdictions. Specifically, from California, Wenger had several phone
conversations with Clark as to the partnership which bred the puppies in
Kentucky, and certain sale proceeds of partnership property (i.e., puppies) had been sent to Clark in
Kentucky.From there the Court
concluded:

Wenger’s conduct pursuant to her business agreement with
Clark facilitated the transaction of business in the Commonwealth of
Kentucky.Such affirmative conduct
constitutes purposeful availment.

Hence
Wenger could be sued in Kentucky.

The suit
was ultimately remanded to the Kentucky state court on the basis that the
amount in controversy was less than the federal jurisdictional threshold of
more than $75,000 for cases in diversity.